How We Turned Friday’s Crash into a Volatility Profit

Where the VIX Stands after Friday’s Crash

On Friday morning, three of my four VIX light indicators turned green – VIX and S&P correlation, volatility of the VIX, and realized volatility of the VIX.

And so, Friday began with a green VIX light, meaning volatility was set to go up, up, up.

Which is exactly what it did – as the market crashed 950 points.

Today, that light has switched back to yellow, as the VIX futures curve is still in a contango.

That means we’re expecting some serious up-and-down volatility moves.

I’m interested to see whether this rally holds or if it gets sold into – but either way, there’s some real opportunity in a market like this.

Oil got way overcooked, XLE shedding 6% at one point in the day.

Buying the dip in oil names is a great way to make some fast cash off of a dropping market like the one we saw on Friday.

We also saw a big rally in bonds…

And, of course, my favorite – trading options on VIX and UXY.

More on that here…

Trading Volatility When the Market Drops

For most investors, Friday was a nightmare.

When the market drops that far that fast, portfolios are severely damaged – especially when it’s a half-day, and most people are away from the markets.

But for option traders, a big volatility spike like that isn’t something to be scared of. It’s an opportunity to make money.

And that’s exactly what my Profit Revolution had the chance to do.

The moment I saw the market dropping the way it was, I logged into our 24/7 chat room.

It doesn’t matter if the market is closed or open – our Profit Revolution chat room is always open.

And that’s where I dropped two bonus trade recommendations to play rising volatility – a call spread on the VIX and a call on UVXY:

By the end of the trading day, both of these were potential winners.

And those who joined the chat room had the chance to make money while the majority of investors lost it.

Interested in becoming a member? Learn more about our live chat room and the trades that come with it right here.

Top Three Names to Watch This Week

1. iShares 20 Plus Year Treasury Bond ETF (Nasdaq:TLT)

There was a nasty rally in the treasuries on Friday while the rest of the market bombed.

TLT Nov 16-29

But corporates did not get that rally. And if we get several days of a spread between corporates and treasuries, well, that’s when we can get in trouble.

For now, I’m closely watching TLT – a name that my Profit Revolution lifetime members took a profit on this morning after 11 days.

2. Pfizer Inc. (NYSE:PFE)

It looks like PFE’s COVID drug was a lot more effective than Merck’s. That’s why PFE is up almost 25% over the last month…

PFE Nov 2021

While MRK is down 14%.

MRK Nov 2021

PFE was one of the few stocks that saw a jump on Friday, and I’m watching it closely as this new COVID strain unwinds.

3. Centennial Resource Development Inc. (Nasdaq:CDEV)

When you look at how this sucker can move, it’s surprising that its options are so inexpensive.

The December 17, 2021 $7 calls, in fact, are only 20 to 25 cents for a three-week look at the energy company that will pay handsomely with a slight move higher in shares.

Tomorrow at 12:30 PM ET, I’m going live right here for my Profit Takeover live show.

Click here to add this event to your calendar – along with the rest of our Money Morning LIVE shows. Just click the blue “Follow Calendar” button.

Until then,

Mark Sebastian
Founder, Profit Takeover

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